Here we have listed some common questions our clients have had regarding our services!
FAQ
FAQ
General Questions
What is debt settlement?
Debt settlement is a process where creditors agree to accept less than the full amount owed as payment in full. It’s typically negotiated by a third-party company on behalf of the debtor.
How does debt settlement work?
Debt settlement companies negotiate with creditors to reduce the total amount of debt owed. Clients make monthly deposits into a dedicated account, which the company then uses to settle debts at reduced amounts.
Is debt settlement the same as debt consolidation?
No, debt settlement involves negotiating with creditors to reduce the total amount owed, whereas debt consolidation combines multiple debts into a single, more manageable loan with a potentially lower interest rate.
Will debt settlement affect my credit score?
Yes, debt settlement can negatively impact your credit score, as it involves not paying the full amount owed to creditors. However, it may be a viable option for those facing financial hardship and struggling to repay debts.
Are there risks associated with debt settlement?
Yes, there are risks involved in debt settlement. These include potential damage to your credit score, the possibility of being sued by creditors, and tax implications for forgiven debt. It’s essential to fully understand these risks before proceeding.
How long does debt settlement take?
The duration of debt settlement varies depending on individual circumstances, including the total amount of debt, the creditor’s willingness to negotiate, and the client’s ability to make monthly deposits into the settlement account. Generally, it can take months to several years to complete the process.
How much does debt settlement cost?
Debt settlement companies typically charge fees for their services, which may be based on a percentage of the total enrolled debt or a flat monthly fee. It’s important to understand the fee structure and ensure that you’re comfortable with the costs involved before signing up for debt settlement.
Will I still receive collection calls during debt settlement?
While debt settlement companies work to negotiate with creditors and halt collection efforts, it’s possible that you may still receive collection calls during the process. However, once a settlement agreement is reached, these calls should cease.
What types of debt can be settled?
Debt settlement is typically used for unsecured debts, such as credit card debt, medical bills, and personal loans. Secured debts, such as mortgages and car loans, usually cannot be settled through debt settlement.